Zhenhua Oil forms new business unit to invest in LNG

According to Reuters, Zhenhua Oil Corp. – a Chinese company and subsidiary of Chinese defence conglomerate Norinco – has established a new business unit, which will invest in LNG terminals.

The newly established unit will also trade the fuel to help satisfy China’s requirements for LNG. Reuters reports that an LNG team consisting of five members was established in June this year at the company’s headquarters in Beijing. It is led by Yu Fengwei, who previously served as the company’s head of crude oil trading.

One unnamed source with direct knowledge of the company’s plans said that this small team is intending to break into spot LNG trade, and will look into deals with its global oil partners in order to secure gas supplies.

The source reportedly said: “As Zhenhua does not have any LNG offtake deals to begin with, one of the ideas is to swap the company’s oil assets outside China with partners’ gas supplies.”

Reuters reports that, with regards to the domestic market, the newly established unit is planning to invest in facilities for the receiving of LNG by working alongside piped gas distributors backed by local government.

All of these plans are currently at a very early stage, with the sources claiming that everything will take time to come into effect.